Los Angeles City Controller Ron Galperin

Los Angeles City Controller Ron Galperin released an audit on Tuesday outlining excessive overtime use in the Department of Transportation. The controller’s office received an anonymous tip from its Fraud Waste & Abuse Hotline and was able to “identify four supervisors in the Traffic Paint and Sign Section who received at least $70,000 in overtime pay during FY 2013-14.” The findings also included a superintendent that received “$155,319 in overtime on top of his normal $78,000 yearly earnings—effectively tripling his salary.”

“This report should put everyone on notice,” said Controller Galperin. “We are watching overtime and we will not permit it to be abused.” The release continued:

[blockquote style=”3″]In FY 2013-14, 93% of Traffic Paint and Sign employees received overtime. Citywide, among full-time employees excluding LAPD, LAFD and DOT, the number was 49%.

Among the other findings:

• Super-human work schedules: One employee was paid for 261 hours during a two-week period. He claimed to work 10 18-hour days and 4 days of at least 16 hours.
• Doing the jobs of two full-timers: 30 out of 67 Traffic Paint and Sign employees, including supervisors, claimed more than 1,000 hours of overtime in FY 2013-14; seven of the 30 claimed to work at least 2,000 hours of overtime. (A full-time employee is paid for 2,080 hours per year. 2,000 hours of overtime in a year equates to, on average, working more than 38 hours of overtime every week of the year. An employee who does this is constantly working double shifts, doing the job of two full-timers.)
• The Tab: Traffic Paint and Sign employee overtime cost the City $3.3 million dollars in FY 2013-14. The average overtime pay for each Traffic Paint and Sign employee was $48,100, compared to $8,377 for other departments, excluding LAPD, LAFD and DOT. [/blockquote]

STOP and Voters for a Fair Arena Deal said they filed the lawsuit against Sacramento City Council, the Sacramento city clerk,  and the city of Sacramento city over a decision to disqualify thousands of petitions that would have put the issue to a public vote on the June 3 ballot — a move many describe as government tyranny.

Jan. 24, the Sacramento city clerk announced that she rejected the petitions, along with 34,000 signatures, on the grounds some of the petition versions did not comply with election code.

“This is not a small number of people,” said Craig Powell, representing Voters for a Fair Arena Deal. “This is a significant contingent of Sacramento voters who’ve said ‘Let us vote.'”

Almost immediately after the announcement of the lawsuit, local Sacramento media reported the lawsuit is “by the group that doesn’t want the arena built.”

STOP and Voters for a Fair Arena Deal have said throughout the battle with the city, they are not opposed to an arena, and in fact are supportive of refurbishing the existing arena, or building a new one; they want the public subsidy of the arena project to be decided on by the voters of the city of Sacramento.

The attorney for STOP and VFAD said the errors the city clerk cited weren’t substantial enough to warrant disregarding 23,000 signatures, KCRA reported. “Nobody can claim they didn’t know what they were signing,” STOP attorney Bradly Hertz said.

“It’s really five mistakes that were really technical by the city clerk’s own admission, and (it is) almost silly that the city would rely on that as their way of trying to disenfranchise their voters,” said Hertz.

STOP is asking a judge to order the City Council to either adopt their petition, or place it on the June 3 ballot, and is hoping the matter will be heard by the Sacramento Superior Court immediately.

However, Judge Michael Kenny, the judge first assigned to the case, excused himself before a hearing in the case started, after it was revealed he had signed the petition to put the arena up for a vote, KCRA reported. The case was turned over to Judge Timothy Frawley.

Petition ‘errors’

STOP and Voters for a Fair Arena Deal said the five errors that the city clerk originally cited are not “substantive” and were just technical errors. Members of STOP told me they had a top elections attorney in the state review the petitions, and were told they complied with the law.

“The4000, a group representing the new downtown arena plan, responded to Friday’s decision by saying, ‘For STOP, this has never been about a vote and democracy; it has always been about tricking voters and stalling the arena with a two-part vote designed to blow up the project,’” reported Fox 40 news recently

The4000 was created by Sacramento Mayor Kevin Johnson, a former NBA player, and the lead proponent to build the new arena.

“We all support the clerk and the city’s efforts to protect the public interest, especially given what’s at stake,” Johnson said in a statement.

Read all of CalWatchdog stories on the Sacramento Kings’ arena deal HERE.

Chloe Stirling is a young entrepreneur, and embodies the American spirit. She  has been running her business, Hey, Cupcake!, out of her parents’ kitchen. She brings in about $200 a month baking cupcakes for family, friends, and social events. Chloe sells her beautifully decorated cupcakes for $10 a dozen, and $2 for each specialty cupcake. Chloe even donated cupcakes when a boy in her school fighting cancer held a fundraiser.

After a local story about Chloe ran in BND.com, Health officials in Madison Co., Illinois descended on the sixth grader’s home. If Chloe Stirling wants to continue selling cupcakes, Health Department officials told her she will need to buy a bakery or build a separate kitchen in the family home.

“Working out of her family’s kitchen, the sixth-grader at Triad Middle School is busy almost every week with her business, Hey, Cupcake!” BND.com reported. “She lost count of how many cakes and cupcakes she has created, but it’s been hundreds. Considering she also runs her own pet-sitting business, ‘No Bones About It,’ with about a dozen year-round clients, and plays soccer, Chloe has a full schedule.”

But because she sells the cupcakes, health department spokeswoman Amy Yeager said she needs a permit, KMOV St. Louis reported. Yeager said by not having a permit, Chloe Stirling violates the county’s food ordinance and Illinois State Food Sanitation Code.

It’s obvious regulators like Amy Yeager have nothing better to do than protect the citizens of Troy, Illinois from Chloe Stirling’s dangerous cupcakes.

And that is the problem: as government expands, it hires more regulators who end up looking for busy work, and ways to generate revenue.

Evidence of this are the numerous stories of health department and police officials across the country shutting down dangerous lemonade stands run by 7-year olds:

In Oregon, Multnomah County health inspectors threatened to fine a 7-year-old for opening a lemonade stand in 2010 at a local arts fair without a license.

Georgia police shut down a lemonade stand run by three girls in 2011, saying they didn’t have a business license or the required permits.

Hoping to raise money for a family trip to Disneyland, a Tulare girl opened a lemonade stand in 2009. But because she didn’t have a business license, the city of Tulare shut it down the same day.

In 2011, in Hazelwood, Missouri two young girls scouts were permanently banned from selling girl scout cookies in the front yard of their own home.  A neighbor ratted them out and the police moved in swiftly to shut them down.

A lemonade stand run by kids in Maryland raising money for a pediatric cancer charity was shut down. Authorities originally slapped a $500 fine on their parents until public pressure from the many news stories forced them to rescind the fine.

Ridiculous government health inspectors and police prompted Robert Fernandes to challenge Philadelphia police when he set up a lemonade stand on Lemonade Freedom Day. His website says, Selling Lemonade is not a crime.”

In a bygone era, if young kids wanted to earn some money, they would set up a stand in front of their home, and sell lemonade, Kool-aid or even homemade cookies. For many children, this was their first opportunity to make and handle money.

Even though Chloe Stirling’s parents are considering building a second kitchen in their basement so she can continue baking, Chloe has more visits from health inspectors ahead of her in the heavily regulated, and dangerous cupcake business.

Friday, the city clerk announced that she rejected the petitions, along with 34,000 signatures, on the grounds some of the petition versions did not comply with election code.

“Due to technical issues identified in the submitted petitions, I find the petition noncompliant with significant provisions of the California Elections Code and the Sacramento City Charter, and therefore insufficient to move forward,” Shirley Concolino, Sacramento City Clerk, said in a press release.

Yet, just last week, the Sacramento County Registrar certified there were enough verified signatures on the petitions to qualify the measure for the ballot.

The signatures were collected by STOP, Sacramento Taxpayers Opposed to Pork, and Voters for a Fair Arena Deal, to put the decision of whether a public subsidy for the new arena project downtown, should be on the ballot in the city of Sacramento.

“The4000, a group representing the new downtown arena plan responded to Friday’s decision by saying, ‘For STOP, this has never been about a vote and democracy; it has always been about tricking voters and stalling the arena with a two-part vote designed to blow up the project,’” reported Fox 40 news.

The4000 is a group headed up my Mayor Kevin Johnson, a former NBA player. “The downtown arena is an extraordinary, once-in-a-generation project with a profound potential to generate catalytic economic benefits for the downtown, city and region,” The4000 claims.

In the letter Concolino sent to STOP about her decision, she cited the nine different petition versions as being problematic. Concolino said even though the petition’s signatures are valid, they were gathered before STOP officially filed their notice of intent with the city clerk’s office.

The state Department of Toxic Substances Control conveniently provided “Legislative Mandates 2013,” a 12-page list and analysis. And it prepared a more lengthy, 38-page “Legislative Summary Report,” which includes both legislation signed into law by Gov. Jerry Brown and bills he vetoed.

The DTSC also recently held a hearing to explain the new regulations and deal with questions about the department’s long permitting time. Most prominently, the report on the DTSC made by the CPS HR Consulting was presented. The hearing video is online.

CPS HR found that DTSC took an average of 4.3 years to issue a permit. By contrast, equivalent federal agencies issue the same type of permit in less than 180 days.  The cause of the DTSC delays was attributed to organizational mismanagement.

DTSC Reorganization

The DTSC provided a list of the 51 tasks it will undertake to respond to the consultant’s report. The tasks included developing a model library, staff holding bi-weekly meetings and quarterly audits.

According to its website, the DTSC is responsible for permitting 117 hazardous waste facilities in the state. All have operated in the state for decades.  Each permit comes up for renewal every 10 years.  On average, the DTSC must process 11 permits a year to maintain current permits, so that all facilities are updated to operate at the most recently required environmental safety levels.

However, despite having nearly 1,200 employees and a $200 million annual budget, the DTSC hasn’t been able to process those 11 permits on time, or even annually.

As to when the DTSC will actually have time to process the 11 permits each year, in addition to managing the reorganization, DTSC director Debbie Raphael said the agency will “explore metrics that better measure quality of our performance. … While timeliness is critical, Permitting values permit quality as a measure of success.” The DTSC employees refer to their department as “Permitting,” with a capital “P.”

Testimony

Several members of the community from Kettleman City traveled to Sacramento and testified at the hearing. They complained about many illnesses in their area. They blamed the illnesses on contamination from a large landfill in Kettleman City. And they blamed the DTSC. The witnesses said healthy people are getting sick and dying, and referenced previous discussions with Raphael about this.

Raphael responded that she was familiar with the witnesses, and even identified several by name.

State Sen. Fran Pavely, D-Agoura Hills, said improving permitting times also was the responsibility of the other “partners” in the relationship with the DTSC. Pavely said one of the partners, the Legislature, passed regulatory bills that have been watered down, making the bills tougher for the DTSC to enforce.

State Sen. Loni Hancock, D-Berkeley, said private sector businesses “are deliberately polluting the air and water,” and need to be held accountable.

The DTSC’s permitting program manager, Brian Johnson, told the public they should expect more delays in permitting while the DTSC works to improve the program quality. Johnson said the DTSC will see whether it needs legislative authorization for more resources. The additional resources would include boosting the budget above the current $200 million a year; and hiring 35 more on the staff to handle the reorganization of the existing 1,200 employees.

Here in the link to the Dec. 16 hearing.

Here is the DTSC presentation at the Dec. 16 meeting.

Here is the CPS HR Consulting report.

 Here is the response of the DTSE the consultant’s report.

Last week, in the lawsuit targeting the arena deal orchestrated by Mayor Kevin Johnson, a former NBA star, Sacramento Superior Court Judge Eugene Balonon had issued a tentative order on the depositions. But he said he would deliberate a little longer on the case law before issuing a final ruling.

The judge's order issued Tuesday supports petitioners’ requests that they be allowed to depose McCarty and Rhinehart.

The plaintiffs are a group of citizens known as STOP (Sacramento Taxpayers Opposed to Pork) who are fighting the arena subsidy deal. According to the lawsuit filed by STOP, the city subsidy is actually $338 million — not the $258 million the city claims.

STOP has tried to get the details of the arena deal and purchase of the Sacramento Kings to be made public.

'Undiscoverable, privileged' information?

The attorney for the defendants insisted in court and in legal filings that the information the petitioners seek from McCarty and Rhinehart is “undiscoverable, privileged information.”

“The court disagrees,” wrote Judge Balanon. “Defendants have not met their burden in asserting this privilege as to Councilman McCarty.”

An order protecting Rhinehart from being deposed was also denied by the judge.

Deposition notices were sent to city officials in September. But according to the plaintiff's attorney, Patrick Soluri, the mayor and city officials have engaged in various avoidance tactics, including filing numerous objections to deposition notices, rolling demurrers, and refusing to comply with a court order directing them to reschedule a further hearing. Soluri said these were stall tactics designed solely to delay the inevitable discovery until after the city’s expected formal approval of the arena in April.

“Defendants request for a stay of all discovery pending a ruling on another demur is DENIED,” the judge wrote in Tuesday's ruling.

Following the hearing last Thursday, Sacramento Bee columnist Marcos Breton ridiculed the lawsuit.

“Did you hear about the 'secret deal' between the city of Sacramento and the Kings? It’s supposedly a backroom, off-the-books, under-the-radar, 'sweetener' that was cooked up secretly between city officials and Kings owners. It would secretly provide hidden subsidies from the city to the Kings for the purpose of secretly making the Kings owners financially whole for 'overpaying' to buy one of the worst franchises in the NBA.”

essay to buyToday Breton may be eating crow for lunch. He's openly championed the arena deal and mocked anyone opposed to it.

Councilman McCarty has consistently opposed the arena deal. He sent a letter to City Manager John Shirey and the news media last February, challenging the use of public money for an arena, questioning whether the city would get a return on its investment and asking who would be accountable if revenues don't meet expenses.

Ballot initiative on subsidy

Beyond the legal challenge to the city’s deal, there is also a ballot initiative petition to require a public vote on any public subsidy for a professional sports franchise.  The petition signatures are currently being counted.

However, it appears Mayor Johnson and the City Council will attempt to moot the result of that vote by pushing up their approvals of the arena prior to the June vote that would thereafter require voter approval.  Approval of the deal and related bond sales were previously scheduled for summer or fall 2014.

See recent CalWatchdog stories covering the Sacramento arena deal here, here, here  and here.

And go here for all of the CalWatchdog stories on the arena deal.

The governor’s $155 billion total spending plan increases the general fund spending to $106.8 billion from last year’s $97.7 billion. The budget only partly addressed the $10 billion owed to the federal government for unemployment borrowing,  about $6 billion borrowed internally from other funds, not to mention the estimated $500 billion in unfunded pension debt.

The budget is flush with new cash due to the modest economic recovery, and to the temporary tax increase from the governor's ballot initiative, Proposition 30, passed in 2012. This tax increase imposed a 10.3 percent tax rate on taxable income more than $250,000, an 11.3 percent tax rate on taxable income more than $300,000, a 12.3 percent tax rate on taxable income more than $500,000, and a 13.3 percent tax rate on taxable income more than $1 million.

Brown's budget also called for using $250 million in cap-and-trade money from Assembly Bill 32, the Global Warming Solutions Act of 2006, to fund the High-Speed Rail project, despite the criticism the project has come under lately, especially from the courts. Brown insisted the High-Speed Rail system, whose long-term cost is at least $68 million, will reduce carbon emissions.

At the press conference, Brown justified cap-and-trade funding the rail, “Cap and trade is a very good source for that … coming from the sources of pollution, to reduce pollution.”

Republican response, and ridicule, was swift to the rail funding idea. State Sen. Andy Vidak, R-Hanford, sent out a response using lyrics from an old song by legendary rock band the Eagles: “Governor Brown, why don't you come to your senses?” 

Vidak meant the proposal could be seen as a desperado attempt to save the project.

'New' budget still ignores debt

Brown also proposed $10 billion in new state spending on schools and community colleges, increasing the spending to more than $45 billion. In addition to the $10 billion going to schools and community colleges, Brown’s budget calls for $1 billion more for universities. Brown indicated he would continue to incentivize the state university systems to encourage graduation in four years.

What’s the carrot? Another $50 million in higher-ed funding.

Medi-Cal, the state's low-income health program, will receive an additional $670 million. Health and Human Services funding will increase to more than $48 billion.

“Wisdom and prudence should be the order of the day,” Brown said several times during the press conference. And he promised to chip away at California’s long-term debt. But Brown said he plans to only repay $11 billion in long-term debt, and would be putting away $1.6 billion in a rainy-day fund.

With the state's overall long-term debt problem chronically ignored, $11 billion is government chump change, and won't really chip away at the massive, growing debt problem.

“We owe $10 billion to the feds alone for unemployment compensation,” said Assemblyman Dan Wagner, in an interview. “$11 billion won't fix the problem, but sounds good in the media.” In Brown’s budgets, the hefty unemployment debt to the federal government is never included in the long-term “Wall of Debt.”

Brown limits what’s included in the Wall of Debt largely to money owed from the 2004 state bonds voters approved, and to money owed to K-12 schools and community colleges. The latter, in effect, is the state “owing” the money to itself.

Wagner said California ought to be working harder to pay the debts from outside of the state, such as the federal unemployment fund debt, which continue to rack up interest and penalties, rather than focusing on paying back funds borrowed from ourselves.

“And the unfunded pension liability is going to kill us,” Wagner added. “California is not back. No way.”

Fiscal restraint through tax increases and salary increases

Brown said he is committed to fiscal constraint. But the Republican minority in the Legislature held otherwise.

“In comparison to the [Democratic-run] Legislature, yes,” Brown has shown more constraint, said Everett Rice, Communications Director to Sen. Mimi Walters, R-Laguna Niguel. “But he also did tax increases, and gave pay increases to state employees. It’s hard to be constrained when you push tax increases and pay raises.”

The debt

Of the significant debt issues, pension and retirement benefits for public employees are unfunded by half a trillion dollars, according to Stanford University, and the state has billions of dollars in other outstanding obligations and debts. The California State Teachers Retirement System pension fund is currently underfunded by $80.4 billion, something Brown acknowledged in his budget proposal.

Brown called for “a new funding strategy” to include more from teachers and school districts, and have the state kick in more. But those solutions were not included in the budget numbers.

“The governor’s budget spends more than it should, pays down a pittance of the state’s long-term debt and saves too little for a rainy day,” said Assemblyman Jim Patterson, R-Fresno, in a statement. “It spends $10 billion more than last year; relies heavily on the new taxes that will end soon; and accomplishes little to chip away at California’s … wall of debt. It appears slightly better than some previous years, but it still misses the mark.”

“We now find that California's state budget situation is even more promising than we projected one year ago,” stated a report on the 2014-15 budget by the Legislative Analyst's Office. “The state's budgetary condition is stronger than at any point in the past decade.”

The estimation represents a surprising turnaround for California, which had been wallowing in a $26 billion deficit only three years ago, when Brown took office after Gov. Arnold Schwarzenegger had failed in his 2003 promises to end “the crazy deficit spending.”

“We have climbed out of a hole with a Proposition 30 tax,” Gov. Jerry Brown announced during budget negotiations last May. He was referring to the $7 billion tax increase voters passed in Nov. 2012.

Raises

The following are some items to look for in Brown's budget proposal to see how, or if, they are accounted for.

On July 1, state workers will begin enjoying 2.5 percent pay raises Brown negotiated for them. That will be followed by another 2 percent on July 1, 2015. Brown explained:

“If I characterize it to please the critics, then I might say that it’s good for the taxpayer.  And if I’m trying to get it ratified, I’ll say it’s a helluva deal for the workers.  So either way, I will err – and therefore, I will say nothing more than it’s fair.”

SEIU Local 1000 President Yvonne Walker said:

“We have achieved each of the four top priorities identified by our members. Protecting retirement security, preserving our 80/20 health benefit premiums, no new furloughs or PLP [Personal Leave Program] days and a wage increase for everyone.”

High-speed rail 

In his budget proposal, Brown is expected to advance spending millions of dollars on the state's controversial high-speed rail project. The money would come from penalty fees assessed by the California Air Resources Board on California businesses for carbon emissions.

Yet a congressional committee is in the middle of a probe of California’s high-speed rail project over charges of conflicts of interest and questionable spending of federal dollars.
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The projected high-speed rail costs have varied from an original estimate of $33 billion, to an official high estimate of $98.5 billion, and back down to $68.4 billion. But the Legislative Analyst’s Office warned it is “highly uncertain if funding to complete the high-speed rail system will ever materialize.”

New taxes?

Senate Bill 768, by Sen. Kevin de León, D-Los Angeles, proposes to more than triple California’s cigarette excise tax from $0.87 to $2.87, amounting to a $2 tax increase on every pack of cigarettes, which would increase the price to about $9 per pack in grocery stores, a little less in tobacco stores. The tax would also extend to cigars.

SB768  is backed by the same coalition which supported Proposition 29, a failed $1-a-pack tax initiative voters rejected in June 2012: the American Heart Association, the American Lung Association, the American Cancer Society, the Service Employees International Union and Health Access California.

These longtime proponents of cigarette tax increases said Prop. 29′s narrow defeat justified bringing it back through the Legislature. The groups also stand to benefit from the estimated $1.4 billion raised by the tax because much of the money would go into medical research and anti-tobacco programs.

A big potential problem would be an increase in the cigarette black market from the higher prices. This has happened in high-cig tax New York City, where 60 percent of cigarettes are black-market smokes.

Debt

Despite the rosy predictions for budget surpluses, the governor's own May 2013 Revision to his budget proposal cautioned the state still does not set aside “significant money” to address the more than $100 billion in unfunded state employee pensions. It also found the state has not set aside enough money to cover the $63.8 billion in unfunded liabilities for retired state employee health care, and “that liability increases by billions of dollars each year.”

There is also the additional $71 billion in unfunded liabilities for the California State Teachers Retirement System, which according to the Legislative Analyst’s Office requires $4.5 billion in additional annual spending in order to maintain solvency.

Moody’s said California’s unfunded pension liabilities for state and local governments actually could be even much higher, totaling more than $329 billion.

On Dec. 16, Gerawan filed a constitutional challenge against the California Agricultural Labor Relations Board, with the United Farm Workers of America as a “Real Party of Interest.” It was filed with the California Court of Appeal, Fifth District in Fresno, against the ALRB’s invocation of the California’s Mandatory Mediation and Conciliation Statute. The statute was signed into law by Gov. Gray Davis in 2002.

This was part of wrangling with the United Farm Workers Union that began in Oct. 2012, when the union insisted that a collective bargaining agreement covering Gerawan workers be reactivated — even though there had been no union involvement with the workers since 1995. Some of the workers then began a process for a vote to decertify the union.

A vote on the decertification was held on Nov. 5, 2013. But On Nov. 19, 2013, the results of the vote were held up by the ALRB, which claimed a large number of the ballots were ineligible. In an email to CalWatchdog.com, ALRB Executive Director J. Antonio Barbosa also charged “misconduct, that allegedly affected the outcome of the election.”

The ALRB chose an arbitrator to decide the matter, leading to Gerawan’s court filing.

Pleading

In its court pleading, Gerawan charged:

“MMC is a compulsory arbitration process under which a mediator acting as an arbitrator dictates the terms of a CBA [collective bargaining agreement] between a grower and a union. The MMC Statute authorizes the Board to adopt the mediator’s report as a final order. The employer has no right to opt-out of this process. The employees have no right to ratify or reject the ‘contract’ imposed upon them, which here would require them to pay union dues or fees or lose their jobs. 

“The MMC Statute empowers one man – here, labor mediator Matthew Goldberg – to write a complex and massive ‘agreement’ between two private parties that would let it have the force of law….“

“This procedure has no counterpart under federal labor law, which expressly forbids the imposition of contractual terms or concessions upon a private employer or a labor organization.”

Overall dispute with the ALRB